Starting off 2008 in Low Gear

The Federal Reserve reported last Friday that overall industrial production edged up jus 0.1 percent in January, mirroring the pace in December. For manufacturing, which makes up over three quarters of industrial production, production stalled in January — no growth — after modest increases in November and December. Under the surface, however, there was a lot of action.

At the same time, 10 sectors (representing 40% of manufacturing output) experienced decreases in production. (Motor vehicles, furniture, wood products, textiles had the biggest declines.)

Basically, the January report on manufacturing is the latest chapter of a story that has been going on for some time. While positive growth in exports are helping some sectors continue to expand, slowing domestic demand (particularly sectors connected to housing as well as motor vehicles) is hurting other sectors within manufacturing.